Average Gain Between Any Two Downturns Has Been 186%
IF you have lost a fortune in shares by now, the best way to make it up perhaps could be by buying some more. Since the Great Depression of 1929, the world has undergone 12 major bear market phases. The average bear market has lasted about 22 months, and the market has fallen by an average of 51%. However, the average gain during the bull market between any two downturns has been an eye-popping 186%. The index here in question is the S&P 500.
Bull markets — after every recessionary phase — have always been good for investors. All major bull rallies since end-1930 have resulted in markets gaining between 50-500%. Historic numbers show that the magnitude (size or breadth) of a bull market is much heavier than that of a bear market. The million dollar question is: Are we at the threshold of another bull market rally?
Markets could go up intermittently, but convincing rallies will take time to happen. The current bear phase is different from what we’ve experienced in the past. There are so many negative factors — distinct and country-specific — plaguing various economies. Only a rise in global demand and depreciating dollar could do some good for the economy and market.
As per Bloomberg data, if one considers the period between 1929 and 1953, there were about 33 months of bear markets, eroding the S&P 500 index by over 86%; the intermittent bull rallies (spanning about 268 months) during the same period logged returns of over 627% from lows. Likewise in 1968 — during the days of Penn Central Railroad Bankruptcy — the bear phase lasted for 11 months eroding the index by over 36%. This was followed by 22 months of solid gains (about 57%) in the market. The market in 1973 — in the days of Arab Oil Embargo and the Watergate — shed about 48% in a span of 21 months; it however, recovered recording a rip roaring 95% gain (70 months duration) in the index. The dot com bust in early-2000 resulted in market losing about 50%; the ensuing bull phase saw the S&P index rising over 97% from lows.
According to experts, there is much more external support for the market to recover than previous times.
Stimulus packages and concerted global action to set ailing economies right have never happened before in times of global recession and the subsequent bear market phase. The package and the combined reconstruction efforts of all economies — both fiscal and monetary — should help the market recover even faster.
It may take time for the economy to recover; though we may see some negative momentum, markets could look better from hereon. Analysts are expecting emerging market inflows to gather steam post the G-20 meet.
IF you have lost a fortune in shares by now, the best way to make it up perhaps could be by buying some more. Since the Great Depression of 1929, the world has undergone 12 major bear market phases. The average bear market has lasted about 22 months, and the market has fallen by an average of 51%. However, the average gain during the bull market between any two downturns has been an eye-popping 186%. The index here in question is the S&P 500.
Bull markets — after every recessionary phase — have always been good for investors. All major bull rallies since end-1930 have resulted in markets gaining between 50-500%. Historic numbers show that the magnitude (size or breadth) of a bull market is much heavier than that of a bear market. The million dollar question is: Are we at the threshold of another bull market rally?
Markets could go up intermittently, but convincing rallies will take time to happen. The current bear phase is different from what we’ve experienced in the past. There are so many negative factors — distinct and country-specific — plaguing various economies. Only a rise in global demand and depreciating dollar could do some good for the economy and market.
As per Bloomberg data, if one considers the period between 1929 and 1953, there were about 33 months of bear markets, eroding the S&P 500 index by over 86%; the intermittent bull rallies (spanning about 268 months) during the same period logged returns of over 627% from lows. Likewise in 1968 — during the days of Penn Central Railroad Bankruptcy — the bear phase lasted for 11 months eroding the index by over 36%. This was followed by 22 months of solid gains (about 57%) in the market. The market in 1973 — in the days of Arab Oil Embargo and the Watergate — shed about 48% in a span of 21 months; it however, recovered recording a rip roaring 95% gain (70 months duration) in the index. The dot com bust in early-2000 resulted in market losing about 50%; the ensuing bull phase saw the S&P index rising over 97% from lows.
According to experts, there is much more external support for the market to recover than previous times.
Stimulus packages and concerted global action to set ailing economies right have never happened before in times of global recession and the subsequent bear market phase. The package and the combined reconstruction efforts of all economies — both fiscal and monetary — should help the market recover even faster.
It may take time for the economy to recover; though we may see some negative momentum, markets could look better from hereon. Analysts are expecting emerging market inflows to gather steam post the G-20 meet.
